He alpine house, inc., is a large retailer of snow skis. the company assembled the information shown below for the quarter ended march 31: amount sales $ 1,107,000 selling price per pair of skis $ 410 variable selling expense per pair of skis $ 45 variable administrative expense per pair of skis $ 17 total fixed selling expense $ 155,000 total fixed administrative expense $ 110,000 beginning merchandise inventory $ 70,000 ending merchandise inventory $ 100,000 merchandise purchases $ 280,000 required: 1. prepare a traditional income statement for the quarter ended march 31. 2. prepare a contribution format income statement for the quarter ended march 31. 3. what was the contribution margin per unit?

Instructions are listed below

Explanation:

1) The general structure of an income statement proceeds as follow:

Revenue/Sales (+)

Cost of Goods Sold (COGS) (-)

=Gross Profit

Marketing, Advertising, and Promotion Expenses (-)

General and Administrative (G&A) Expenses (-)

=EBITDA

Depreciation & Amortization Expense (-)

=Operating Income or EBIT

Interest (-)

Other Expenses (-)

=EBT (Pre-Tax Income)

Income Taxes (-)

=Net Income

In this exercise:

Revenues= 1107000

COGS= Beginnig inventory + purchase - ending inventory= 250000

Gross profit= $857000

Administrative expense= $17 *2700q+110000= 155900

Selling expense= $155,000 + 45*2700q= 276500

EBITDA= 424600

2)A Contribution Margin Income Statement is a special format of the income statement that segregates the variable and fixed expenses involved in running a business. It shows the revenue generated after deducting all variable and fixed expenses separately.

Sales= 1107000

Variable costs:

Cost of goods sold= 250000

Variable Selling expense= $45*2700= 121500

Variable administration expense= 17*2700= 45900

Total variable costs= 417400

Contribution Margin= 689600

Fixed costs:

Selling expense= 155000

administration expense= 110000

Total fixed cost= 265000

Net profit= 424600

3) Unitary contribution margin= contribution margin/Q= 689600/2700= $255.41

disadvantages of leasing a vehicle: no vehicle equity and mileage limitations

disadvantages of purchasing a vehicle: large down payment and vehicle depreciation

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